Other information:This file is a brief presentation which addresses some basics of Pull Systems.

A pull system is where processes are based on customer demand. The concept
is that each process is manufacturing each component in line with another
department to build a final part to the exact expectation of delivery from
the customer.

Because your production process are designed to produce only what is deliverable
your business becomes leaner, as result of not holding excessive stock
levels of raw, part-finished, and finished materials.

One of main identifier of pull systems comes in the form of having Kanban
methods in your production cycle. In essence a Kanban can be described
as a visual aid which is used to show that either you have either finished
a
process, require work/more materials. The aim of having a visual aid
is that the person who either feeds work off you or gives you work, becomes
apparent
of your needs quickly. Kanban is a concept that lends itself to high
turnaround industries, but it can be applied to other environments. We shall
be discussing
Kanban in more detail in other areas of this web-site.

Unfortunately pull systems do not lend themselves to all business types,
because of product types, lead times and any stock holding arrangements
with customers.

However by having pull systems in some of your production processes,
you will be able to reduce your lead times, and perhaps associated
costs.

Going forward by moving backward
is how one author described a pull system. Others use the analogies of drums,
buffers and rope to explain how to "pull" production
through a manufacturing shop. There are numerous images one can use to visualize
pulling goods through a plant. Since pull systems are frequently contrasted
to so-called "push" systems (i.e., MRP II) in which production is
master scheduled to push production from one operation to the next whether
needed or not, they are often thought of as merely scheduling or shop floor
control tools. In fact, pull systems are much more. They are the heart of
a synchronized factory. They permit synchronization by working backward through
signals or triggers which cause production events to happen. The experience
of backward motion starts at the finished goods warehouse or shipping area
and signals the previous operation - final assembly - when more finished goods
are needed. Final assembly in turn signals a previous operation - perhaps
a component fabrication department - when more components are needed. Component
fabrication shops may signal a preceding manufacturing department or a raw
materials storekeeping area which would signal a vendor to make a delivery.
The signals in a pull system are in fact inventory levels for fabrication
and raw materials replenishment and may be either inventory levels or a forecast/schedule
for finished goods replenishment. With such a system in place, shipment of
finished goods triggers withdrawal of components for assembly to replenish
the shipped goods which triggers withdrawal of raw materials for fabrication
to replenish the withdrawn components and so on through the triggering of
a vendor shipment to replenish raw materials. This pull sequence system is
known as a Kanban system in Japan and in The Toyota Automobile Corporation
where it was developed and refined. More revealing of its simplicity is the
fact that the Kanban system is often still called the supermarket system because
the concept originated in observation of American supermarkets by Toyota executives.
The Toyota executives observed that when customers withdraw goods from the
small stocks on supermarket shelves, the stocks are replenished in small quantities
by a stock clerk who checks the shelves and replaces only the quantity which
was taken. The first pull signal came from the customer who withdrew the inventory
and told the stock clerk how much to replenish. The Toyota executives reasoned
that this supermarket concept could be adapted for management of a factory
on a simple visual basis. Since it is impractical to have roving "stock
clerks" in a factory, a card is used to communicate to the production
foremen the fact that a shelf was empty. The Japanese word for card is kanban;
hence the name Kanban for a pull system.

THE KANBAN APPROACH

In a system which triggers production in backward motion, a system of signals
is the means to communicate the replenishment of goods. The signal media in
a "classic" Kanban system are cards and containers. While there
are many variations on the visual Kanban theme, the most instructive is the
Toyota system. The Toyota system utilizes a specifically sized container for
each part which cycles back and forth between the producing department and
the using department (each may have specific store-keeping areas). Two cards
(kanban) are used: a production kanban and a conveyance kanban. These kanban
specify the part number, the container capacity and other data.

When a using department withdraws a container of parts, the conveyance kanban
previously attached to it by the producing department is detached and placed
in a collection box. When the most recently emptied container for the same
parts is ready to be conveyed to its producing department, the conveyance
kanban in the collection box is attached to it. At the time this empty container
is received by the production department, the conveyance kanban is detached
and attached to a recently manufactured full container of those parts which
is then moved to the using department. The removal of the full container out
of the producing department triggers production through removal of a production
kanban attached to it which is placed in a collection box. The production
kanban in the collection box are transferred hourly to a dispatch box and
serve as the authorization for the foremen to produce those parts within a
specific time frame and fill an empty container. When the container is filed
the production kanban is attached to it and the container is placed in a store
area awaiting transfer to the using department. This process repeats itself
over and over again.

There are three simple rules which control this Kanban system:

• Producing departments may not make parts unless there is a production
kanban in the dispatch box authorizing production.

• There is precisely one conveyance and one production kanban for each
container.

• The number of containers are controlled by manufacturing management and
are kept to the smallest possible quantity in size. (Toyota management must approve
the use of a container holding more than a tenth of a day's supply.)

Kanban systems are the conceptual model for pull systems in other environments
and in fact numerous variations exist. There are single card Kanban systems;
some systems use metal plates instead of cards; one company uses numbered ping
pong balls; General Motors sends Kanban signals via computer. No matter what
the variation on the signal, the principle is the same -- the using department
tells the producing department what to do based upon demand at the beginning
of the chain, a sale of the product. Hence the name pull system.

SIMULATION WITH CYCLE TIMES AND FORECAST RATES

The basic concepts of a pull system are the ideas of small lot production in
standard lot sizes (the container) signalled by inventory depletion (the production
kanban). For manufacturing companies in which the Toyota Kanban system is culturally
cumbersome and with frequent demand fluctuations, there is an alternative. That
alternative is to simulate the container and card system with cycle times, lot
sizes and the company's automated perpetual inventory system. How exactly does
this work?

In the "classic" Kanban system the containers represent the lot size
called for by the container size. In an automated pull system, lot sizes and
cycle times reside in computer files. The automated "system" sends
signals when the perpetual inventory, also resident in the computer files, diminishes
to a point which would represent the removal of a container from the production
department and the receipt of the Kanban card by the production department. Let's
discuss some of the key concepts and then put them together as a system.

• Cycle times. A cycle time for a pull system is the realistic amount of
time it takes to manufacture or procure a specified amount of goods by a work
center or from a supplier. This is a replenishment cycle time as differentiated
from a capacity oriented line speed. As such, replenishment cycle times closely
resemble the lead time that a vendor quotes to a purchasing manager. Customarily,
the vendor doesn't quote the capacity/line speed to the purchaser. They quote
a period of time which takes capacity into consideration but also recognizes
projected demand and the mix of items expected in their shop. It is similar for
an internal cycle time -- the work center is treated as a vendor with a capacity,
expected load, changeover rate and mix to manage. These factors are taken into
account and a cycle time expressed usually in days is set with which to set inventory
levels and to trigger production to be completed within the cycle time.

• Forecasts. Sales forecasting is the critical element in all manufacturing
management and control systems. In an MRP II system it is used to set the master
schedule and then push product through manufacturing. In a pull system it is
used to turn a cycle time into a targeted inventory level. The difference is
significant. The unit forecast for a particular end item usually covers a specific
period of time -- a month, a quarter, a year and so forth. In MRP II, the gross
unit forecast is used; in a pull system, the gross unit forecast is converted
to a rate of sale expressed in the same denomination as the cycle time for final
assembly of the end items. For example, if final assembly cycle time is expressed
in days then the forecast will be expressed as a daily rate, if in hours then
the forecast will be expressed as a rate per hour.

• Buffer stock. In the drum, buffer, rope image of pulled through production,
buffer is the stock level that creates balance in the system (simply stated:
the drum is the constraint which paces the plant and the rope is the communication
system which links the actions of the work centers into a synchronized flow).
At the finished goods level the buffer stock exists to permit product to be shipped
in less time than the final assembly cycle time. For component parts, buffer
stocks are designed to permit production of finished goods in less time than
the fabrication cycle time. These buffer inventories are determined by multiplying
cycle times by daily forecast rates to provide for the least amount of stock
and to protect production and shipment reliability.

• Lot size. The lot size for production will usually be expressed as a
combination of cycle days and the daily forecast rate. However, it can never
be set at an amount which is unrealistic to a constraint (bottleneck) in the
routing. Also, if desired the lot size can be set to pace production and thereby
become a proxy for the drum in the drum, buffer, rope image.

In constructing a pull system from these concepts, it will be helpful to use
a simple one product, two component model. Starting with the cycle times: we
determine, with the foreman and the planner: (i) that the work center our product
is made in requires a five day cycle in finished goods assembly, (ii) that the
fabrication center requires two and three days to make each of the components
for our product, and finally (iii) that the vendor supplying the raw materials
has a ten day lead time. We'll then assume that the forecast for our product
converts to ten units per day and that components and raw materials are in a
one-to-one relationship to the end item (with no scrap, miraculously!). Now we
need buffer stocks to protect shipability and lot sizes to communicate to the
work centers. With a final assembly cycle time of five days we need to have a
finished goods buffer of something more than a five days supply, in this case
more than fifty units. We also need component buffers of something more than
two and three days supply -- twenty and thirty units -- and raw material buffer
of something more than ten days supply or one hundred pieces. Now for lot sizes,
assuming no bottleneck, we set the lot size at twice the cycle time for finished
goods, components and raw materials. This means that manufacturing or procurement
will deliver a quantity of twice the cycle time extended at the daily forecast
rate within the agreed upon cycle time. In our model this means one hundred end
items produced in five days; one hundred forty and one hundred sixty each for
component parts within their two and three day cycles; and three hundred sixty
pieces of raw material within its ten day cycle time. The lot sizes can be less
but should rarely ever be greater than twice the cycle time. The general lot
size rule for customer service protection is twice the cycle time for the operation
plus the cycle times of all preceding operations.

It should now be evident that cycle times and the forecast rate are the building
blocks of a pull system and that lot sizes and buffer stock are arithmetic functions
of them. Buffer stock levels now become the trigger for a signal through the
system to manufacture or procure goods. So, as finished goods inventory diminishes
to a point below its cycle -- in our model, a five days' supply -- a signal is
sent to release a shop order to make a ten day lot size in five days. At the
rate of forecasted demand, inventory will decline to zero in five days at which
time it will be replenished in an amount sufficient to service customers for
five days until another signal is sent. The same things happen for fabricated
components and raw materials to signal production or procurement in their cycle
times. The signals through the perpetual inventory and the connected pull system
files and logic and the shop orders generated are the "rope" in the
drum, buffer, rope model of manufacturing.

A pull system which simulates Kanban with cycle times and forecast rates effectively
combines the simplicity of inventory and production management inherent in Kanban
with the synchronized vision of drum, buffer, rope. With the exception of bottleneck
corrections the system is self adjusting through the management of cycle times
and a dynamic forecasting process.

IMPLICATIONS AND BENEFITS

The chief implication of a pull system is manufacturing discipline and discipline
is also the main benefit. More specifically a pull system needs:

• Continuous forecasting to keep the system constantly self adjusting to
market demand with good data.

• Adherence to shop order due dates to assure that customer service levels
and buffer stocks are maintained.

Among the many noticeable benefits of a pull system combining the best features
of Kanban and Drum-Buffer-Rope is a balanced inventory which permits the company
to meet customer lead time commitments. Perhaps as important is the continuous
improvement ethic set up by such a system. The focus of continuous improvement
will be on reduction of cycle times which in turn enhances flow and permits reduction
of buffer stock inventories. There are numerous others -- greater WIP turns,
less overtime higher throughput.

Will it work in your plant? The answer is a resounding yes if you are in a job
shop, repetitive manufacturing process or a discrete fabrication assembly shop.
The configuration is slightly different but the pull system works equally well
and produces the same benefits.